1. Economic Systems Africa’s South Africa, Nigeria, and Kenya
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2. Traditional Command Market
Let’s Review
Do you remember the three questions that every country must answer when developing its economic plan?
What goods/services will be produced?
How will goods/services be produced?
Who will consume the goods/services?
The way a country answers these questions determines what kind of economic system it will have:
Traditional Command Market
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3. Traditional Rural African villages have traditional economies.
All economic decisions are based on customs, traditions, & beliefs of the past.
People will make what they always made and do the same things their parents did.
The exchange of goods is done through bartering.
Bartering = trading without using money
Rural African villages have traditional economies.
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4. African Village Traditional Economy
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5. Command All economic decisions are made by the Government.
The government owns most of the property, sets the prices of goods, determines the wages of workers, plans what will be made…everything.
This system has not been very successful; more and more countries are abandoning it.
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6. Command
This system is very harsh to live under; because of this, there are no PURE command countries in the world today.
Some countries are close: Cuba, former Soviet Union, North Korea, former East Germany, etc.
All of these countries have the same type of government: Communist! The government is in control of everything.
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7. North Korea’s Command Economy
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8. Market
Economic decisions are made based on the changes in prices that occur as buyers & sellers interact in the market place.
The government has no control over the economy; private citizens answer all economic questions.
In a truly free market economy, the government would not be involved at all. Scary…
There would be no laws to make sure goods/services were safe. *Food! Medicine!
There would be no laws to protect workers from unfair bosses.
Because of this, there are no PURE market economies, but some countries are closer than others.
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9. Hmmm…
Since there are no countries that are purely command or purely market, what does that make them?
Most democratic countries have some characteristics of both systems, so we keep it simple and call them: MIXED.
Of course, most countries’ economies are closer to one type of system than another.
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10. 2016 Index of Economic Freedom
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11. SOUTH
AFRICA
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12. Mixed
South Africa has a mixed economic system that is about 65% free and 35% command.
Its economy is not run entirely by the government, nor does it move entirely by free market choices.
South Africa’s government controls some areas like the postal service and some oil and gas companies.
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13. 3 Questions How does South Africa answer the three economic questions?
What to Produce? Individuals and corporations; government has some regulations
How to Produce? Individuals and corporations; government has some regulations
For Whom to Produce? Individuals and corporations; government has some regulations
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14. Freedom
Throughout the past several decades South Africa has transitioned away from a command economy and is moving more towards a market one.
South Africa’s national government has let more and more citizens and private corporations take over industries that it used to own.
The government has loosened its control and now encourages competition among businesses, which has helped the economy grow.
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15. Regulation
While private enterprise is playing a larger role in South Africa’s economy, the national government still as a hand in the country’s economic planning.
The government operates the postal service and some of the communications network.
It also owns some of the oil and gas companies, and healthcare is both public and private.
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16. Resources
South Africa is an industrialized nation with large service and manufacturing industries.
It benefits from the abundant precious metals and minerals found in the country.
South Africa is a well-known producer of diamonds and one of the world’s top producers of gold.
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17. Finsch Diamond Mine, South Africa
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18. Today
During the apartheid era, South Africans suffered under segregation laws.
When apartheid ended in 1990, black South Africans were granted many rights, including the right to own their own businesses.
This opened up more competition and created a stronger market economy in South Africa.
Unfortunately, South Africa is still feeling the effects of apartheid and poverty, crime, and unemployment are problems the country faces.
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19. NIGERIA
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20. Mixed
According to the Index of Economic Freedom, Nigeria has a mixed economic system that is about 60% free and 40% command.
In 2015, Nigeria surpassed South Africa to become the largest economy in Africa.
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21. 3 Questions How does Nigeria answer the three economic questions?
What to Produce? Individuals and corporations; government regulates oil and agriculture
How to Produce? Individuals and corporations; government regulates oil and agriculture
For Whom to Produce? Individuals and corporations; government regulates oil and agriculture
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22. Freedom
In recent years, Nigeria has transitioned away from a mostly command economy and is moving more towards a market one.
Citizens are free to own property and start their own businesses.
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23. Regulation
Private enterprise is playing a larger role in Nigeria’s economy; however, the Nigerian government still controls large parts of the country’s two most important industries—oil and agriculture.
Recently, the national government has been giving more control of these industries to private businesses in hopes of improving the economy and the standard of living for Nigerians.
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24. Resources
Nigeria is fortunate in that it has many valuable natural resources.
In the 1970s, oil was discovered in the country.
Since then, Nigeria’s economy has grown based on its ability to export oil to countries around the world.
Nigeria is the largest producer of oil in Africa.
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25. Nigerian Oil Pipes
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26. Today
Since gaining its independence in 1960, Nigeria has been ruled by ruthless military dictatorships.
Under strict government control, Nigeria had mostly a command economy.
Today, the country is more democratic and the government is giving more economic freedom to its citizens.
Nigeria’s government has been partnering with private businesses to provide greater access to electricity, improve roads, and to increase agriculture.
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27. KENYA
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28. Mixed
Kenya has a mixed economic system that is about 50% free and 50% command.
High levels of corruption in Kenya’s government have hurt the country’s overall score on the Index of Economic Freedom.
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29. 3 Questions How does Kenya answer the three economic questions?
What to Produce? Some individuals and corporations; government regulates mining, banking, oil refining, & electricity
How to Produce? Some individuals and corporations; government regulates mining, banking, oil refining, & electricity
For Whom to Produce? Some individuals and corporations; government regulates mining, banking, oil refining, & electricity
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30. Freedom
Kenya’s citizens are allowed to own property and start their own businesses.
Businesses decide what to produce and how, and what prices to charge for their products.
Unfortunately, because of corruption and bribery in Kenya’s government, laws meant to protect businesses are not always fairly enforced.
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31. Regulation
Kenya’s government owns all or part of several industries including banking, electricity, mining, and oil refining.
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32. Resources
Kenya is the banking, transportation ,and communication hub of East Africa.
Agriculture, tourism, and manufacturing have helped Kenya become the strongest economy in the region.
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33. Safari Tour in Kenya
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34. Today
In recent years, Kenya’s agriculture industry has suffered from drought.
Also, the tourism industry has declined due to terrorist activity within the region.
Fortunately, Kenya’s economy is recovering.
Economists predict that it will continue to grow stronger as the quality of life for Kenyans improves.
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35. South Africa Nigeria Kenya Africa’s Economic Systems Economic System
Directions: Complete the chart below with information that you learned during the presentation.
Economic System
What do Private Citizens and Companies Decide?
What Does the Government Control?
Economic Struggles
South Africa
Nigeria
Kenya
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